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If you could let me know your query, please.
Quite simply, if you have a jointly owned property and then there is a transfer of equity to the other person, so one of the original two owners owns the property in it's entirety, does that relinquish any interest in the property of the person who has made the transfer; ie no longer owns any part of it?
Once the Transfer is registered at the Land Registry, and only the 1 party is then shown as the legal owner, then the other party is no longer a legal owner of the property and has no legal interest in the property.
In the said Transfer, there is a panel to say what consideration, if any, is being paid to the party who is transferring their share to the other. If any consideration (normally a lump sum payment) remains outstanding at the time the Transfer is dated and registered at the Land Registry (which would be very unusual), then the party transferring their share in th eproperty is still entitled to receive the stated consideration.
I hope this answers your question, but please let me know if you require any further clarification.
If half the O/S mortgage is being taken over by the new sole owner I presume this would be the consideration?
Yes, taking over the Mortgage would be classed as the consideration. Therefore, if the Transfer has completed and the one party has been removed from the Mortgage, then that party now has no legal interest or ownership in the property at all.
Hope this helps.
One final question in relation to this and a mortgage.
Some mortgages will not allow an occupier to live in the property if they have any interest in it? In light of the above I presume the previous part owner is deemed to have no interest from this viewpoint either?
If you can answer this that would be great, if it is not your field of expertise please let me know and I will complete the answer.
Whenever there is an adult occupier residing in a property and who is not party to any Mortgage registered against the property, the Mortgage Lender will ask that that party sign an Occupiers Form, which basically states that any interest they have in the property is postponed behind the rights of the Lender. So, this means the occupier would have to vacate in the event of the property being repossessed and IF they did have any interest in the property, any claim would only be on the share of equity which is left over after the Mortgage had been paid off in full.
Hope this assists.
So to confirm, for this scenario, the transferor would no longer have any interest anyway?
In the scenario I mentioned, it just means that any rights the adult occupier has are postponed behind the rights of the Lender.
The classic example is -A buys a house with a Mortgage. A's partner (B) is also going to be residing in the property, but is not on the Mortgage. B signs the standard Occupier's Letter provided by the Lender.
A fails to pay the Mortgage and the Lender re-possesses.
While living there, B had previously paid for and built a Conservatory at a cost of £30,000. B therefore has what is called an "equitable interest" in the property.
Property is repossessed and sold for £120,000. The amount outstanding under the Mortgage was £110,000. The Lender is entitled to their £110,000 back, and B is not entitled to try and re-claim his full £30,000.
However, from the equity left over and which is paid to A (£10,000), B would the make a claim against A on the basis of his equitable interest.
Thank you for this,
So am I right in thinking:
1 - A transfer of equity does not remove all interest in the property?
2 - Is there time limit which removes the equitable interest - ie certain amount of years lapses after which Person B can no longer claim?
1. A transfer of equity means the one party has no LEGAL interest in the property. However, if that party increases the financial value of a property by carrying out a certain act (eg building and paying for an extension), then they acquire an "equitable right". Merely assisting with th epayment of bills/other outgoings does NOT create any equitable interest.
2. There is no time limit-if a party increases the value of a property, they acquire an equitable interest at that time and are entitled to make a claim at any time in the future.
I hope this answers your questions.
My final question is:
Is it fair to say that a mortgage company are more concerned with legal interest vs equitable?
Correct- a Mortgage Lender is not concerned at all about any occupier having an equitable interest, as they have the security of their Mortggae, so know they have "first biter of the cherry" if the borrower defaults on the Mortgage.
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